# Lyft recovers more than half its business, stock heads higher

The number of active riders rose 44% to 12.5 million in the third quarter, as ride hailing began to rebound after the easing of strict coronavirus-related lockdowns. That ridership number was still down 44% from the year-ago quarter, though, and revenues were similarly nearly cut in half as executives cautioned that the recovery is uneven.

“We remain confident that demand will continue to return,” Lyft Chief Executive Logan Green said on a conference call, during which he expressed optimism about a possible COVID-19 vaccine.

In the call, Green hailed his company’s successful push for Proposition 22 on Tuesday’s ballot in its home state as a “win win win for drivers, riders and California’s economic recovery.”

See: Uber and Lyft win fight to keep drivers as contractors instead of employees in California

Prop. 22 allows gig companies like Lyft
LYFT,
-4.35%
to continue classifying their drivers as independent contractors, but provides them with guaranteed earnings and health-care subsidies. The ballot initiative exempts the companies from a California law that would have required them to treat their workers as employees.

Lyft President John Zimmer said on the call that he hoped Prop. 22 would be seen “as a watershed moment,” and, like other gig-company executives, said he is looking to replicate the victory elsewhere.

“It’s a working model that other states can look to,” he said.

Shares of Lyft rose more than 5% in extended trading Tuesday after closing at $36.05 in regular trading, a 4.4% decline. Lyft had gained more than 50% since Election Day before its Tuesday decline.

Also: Uber earnings continue to recover, CEO signals intent to expand new driver model after election win

Lyft posted a third-quarter loss of $459.5 million, or $1.46 a share, on revenue of $499.7 million, down from $955.6 million a year ago. After adjusting for stock-based compensation and other effects, Lyft reported a loss of 89 cents a share. Analysts surveyed by FactSet on average expected Lyft to post a loss of 93 cents a share on revenue of $487.4 million. 

Besides recovery in ride-hailing, Zimmer pointed to other “bright spots”: He said bike and scooter rentals rose in the quarter, and that Lyft Pass holders are using ride-hailing as an alternative to taking public transportation. Green mentioned the company’s food-delivery pilot but said it was “early days” and indicated he was more interested in possible business-to-business partnerships.

The company did not provide an official fourth-quarter forecast because of the uncertainty around the pandemic, but Chief Financial Officer Brian Roberts did say he thought revenue could grow 11% from the previous quarter. He warned, though, about possible headwinds that include a seasonal decline in bike and scooter rentals and a return to lockdowns. The company also moved some of its spending on Prop. 22 to the fourth quarter, he said.

Lyft executives said the company expects to achieve Ebitda profitability by the fourth quarter of 2021. Roberts said the company’s cost-cutting and discipline means “we’re going to emerge on the other side of COVID more profitable per ride.”

Lyft shares are down more than 12% so far this year, as the S&P 500 index
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has gained 9.7%.